How to Live in Britain/The Basics/Money

This section is a quick overview of what the monetary system in the UK consists of and how money is used, obtained and spent. Currency itself is a fairly crude method of representing the value of human effort, but love it or loathe it, money is essential for life in the UK today. The use of money is a skill that becomes intuitive with practice; it is a game that is simple to learn but virtually impossible to master. The worth a currency holds relies on the trust of the people that use it that the currency is worth something.

Money in the UK is generally used in denominations of pounds and pence (International Symbol: GBP) represented physically, symbolically or electronically. One penny is currently the smallest amount of GBP you can have, and there are one hundred of these to a pound.

In holding money, either in physical form or in electronic or symbolic representations, you are using it. You consider the money to be worth a certain amount of food, human labour or comfort, and through this the money has a purpose in holding its own value. However this purpose becomes much more tangible when the use is actualised through the money being spent or invested in human labour or commodities.

In the medium to long term, money is typically held in electronic form in an account at a bank. Banks in the UK typically do not require you to pay them directly for this service; any money you deposit to the bank you can withdraw again. The banks gain from keeping some of the interest gained on the money held, and through penalty charges invoked by violation of a consumer agreement by customers.

Particularly in the short term, but also in the long term, money can be held in physical form as cash. The convenience of cash is that it is easily portable and accepted practically everywhere. Some people prefer to use cash over electronic payment methods such as debit or credit cards as these methods could potentially allow tracking of consumer usage and counteract anonymity. Due to its less traceable nature, cash can also be used to attempt tax evasion by disreputable tradespeople.

Typically something on which money can be spent has an advertised value. This may be relatively fixed, as in the price of a loaf of bread, or fluctuate rapidly, as can happen with shares held in a company. To exchange money for commodities or services, an interaction has to take place. This can be in person, over a telephone conversation, electronically, or via a previous agreement.

The difference between spending and investing is almost transparent; that is, in spending the money, you intend to consume the resource that the money is spent on, whereas an investment is made in the hope of obtaining a monetary profit. However an argument could be made that any spending of money is also an investment. To give an example, a human needs to consume food to live. The economy of society would suffer slightly if the human died, and therefore the spending of money on food is a justified investment by society as a whole. This thought process can be extended to luxuries on the basis that happier people work more productively.